Posted by chill on March 04, 2000 at 07:02:04:
More info. I should add that I am buying this property no money down. The seller is going to help with the down payment by way of cash back at closing. I should be in with only closing cost and loan fees. Does this make more sense?
1st deal questions, HELP !!! - Posted by chill
Posted by chill on March 03, 2000 at 20:13:58:
I looked at a SFH, 3bed 1 bath, today. It is in contract to another investor for $59,500, he has offered to assign it to me for $62,000. The house needs only minor repairs, about $2500 - $3000 in cosmetics ( paint, carpet, general clean up). After the facelift it should sell for about $75,000. I was thinking of offering it on a L/O after the repairs for $74,900 with $3500 option consideration and $750 a month with $100 a month going towards purchase price for 1 or 2 yrs. Rents in the area are $650 to $700. Does this deal sound like something that is do able for a first deal? I Need Help!!! The other investor has already run ads on the house and has offered to turn over all the leads. I think he is on the up & up. If this is a good first deal, whats my next step? Thanks for the help.
Are we talkin’ CASH??? - Posted by Rick W.
Posted by Rick W. on March 04, 2000 at 05:29:12:
Hopefully you’re not thinking about paying $62,000 CASH for a house that might be worth $75,000, AFTER spending another $3,000 for a face-lift. By the time you consider your acquisition expense, repairs, holding costs, selling/advertising expense, and closing costs to sell, you’d be lucky to make $5-$8,000 NET.
Say you make $8,000 (Murphy moved away from your town and everything went exactly as planned), and you spent $67,000 to do it, that’s a terrible CASH ON CASH return.
Instead of paying cash for the property, you need to attempt to create some Owner Financed terms if you are contemplating paying that close to market value. Then, after you spend only $5,000 to make an additional $8,000, “you done GOOD!”.
I realize that the numbers might look good initially, but you need to learn a bit more about the true cost of the deal before you attend one of those “expensive” seminars, the ones you learn from YOUR mistakes instead of the mistakes of others. That’s the quickest way I know to become a FORMER Real Estate Investor.
GOOD LUCK!
Rick W.
Re: 1st deal questions, HELP !!! - Posted by Jim Holmes
Posted by Jim Holmes on March 04, 2000 at 01:27:04:
Chill,
I did a deal similar to this last month…sounds very doable. If you can get the investor to give you more rent credit than you are giving to your buyer. This deal should make you money up front (cover your rehab costs) money and rent credit positive on the way and then a super boost at the end. Sounds good.
Good Luck!
-Jim from Idaho